Despite losing two high-profile cases in seven days, the ethanol industry says the future is bright for the corn-based biofuel that it promotes as a low-carbon alternative to gasoline and a tool to slow global warming. “We view both decisions as only temporary setbacks but neither will deter the industry from pressing forward and pursuing new domestic and international market opportunities,” said Geoff Cooper, chief executive of the Renewable Fuels Association.
Trade group Growth Energy said it was optimistic about ethanol, notwithstanding adverse rulings by the Supreme Court, on EPA’s power to exempt small refineries from the federal mandate to blend ethanol into gasoline, and the U.S. appeals court in Washington, which overturned a Trump-era rule for year-round sales of E15, a richer mix than the traditional 10% blend of ethanol into fuel for cars and pickup trucks.
“We have an affordable, environmentally friendly product that has a high value to not only the consumer but also retailers,” said Growth Energy when asked about the longer-term impact of the decisions. “We remain optimistic about the future of ethanol.”
The EPA “will review the decision,” said a spokesman when asked about the appellate ruling. Previously, the EPA said it was analyzing the Supreme Court decision of June 25, which made more refineries eligible for RFS waivers, and “will follow the law and base our decisions on sound science while ensuring transparency.”
For months, the ethanol industry has promoted ethanol as the climate-friendly automobile fuel of the future. Shaking off criticism of converting food to fuel, it refers to E15 as Unleaded 88 — the octane rating of the fuel, a step up from regular grade gasoline at 87 octane. It sees adoption of a low-carbon fuel standard or a requirement for higher octane fuel as an opening for a biofuel that was popularized as a homegrown answer to imported petroleum and the threat of Middle Eastern fuel embargoes.
Farm-state allies filed bills in Congress last week to encourage use of higher ethanol blends. One bill would make $1 billion available to help retailers install pumps, storage tanks, and other equipment to dispense E15 and other higher-blend biofuels. Another would provide automakers a $200 refundable tax credit for each Flex Fuel Vehicle, capable of burning higher-blend fuels, that they make. A third bill would create a tax credit, available to refiners or retailers, of 5¢ a gallon for selling E15 and 10¢ a gallon for blends above 15%.
Congressional consideration of climate change and infrastructure bills could provide the legislative vehicles for ethanol, like many other industries, to advance its goals.
A month before the 2018 congressional elections, President Trump ordered EPA to allow year-round sales of E15. “We want to get more fuel into our system and this is a great thing,” said Trump on his way to a campaign rally in Iowa. At that time, E15 was barred from summertime sales in most of the country as a protection against smog. In the Farm Belt, home to ethanol production, Trump’s announcement was regarded as a tonic for trade-war jitters.
The EPA overstepped its authority in its June 2019 regulation allowing year-round E15 sales, ruled the U.S. Court of Appeals for the District of Columbia on Friday, in vacating a key section of the rule. Against the plain text of a statute allowing air-quality waivers for fuel containing 10% ethanol, the agency improperly interpreted it to mean “containing at least” 10%, said the appeals court in a unanimous ruling.
While the petroleum industry challenged the approval of summertime E15, the appeals court noted the ethanol industry argued the EPA “does not go far enough. They assert that fuel blends with more than 15% ethanol are substantially similar to E10,” so they should be given fuel-volatility waivers too.
E15 is a small part of the U.S. fuel market. The Energy Department estimated gasoline consumption at 123.5 billion gallons in 2020. There are official figures for E15. The Renewable Fuels Association estimated 2020 sales at 520 million gallons. The so-called ethanol mandate is 15 billion gallons a year.
“We are working to assure continuity of E15 sales through the 2021 summer season and beyond,” said ethanol groups and the National Corn Growers Association. “We are pursuing all available options and will work with the administration and our congressional champions to ensure we have a solution in place before the 2022 driving season.”
The Renewable Fuel Association said it was exploring its options. “As such, we have not ruled out the pursuit of a re-hearing in the DC Circuit Court or an appeal to the Supreme Court,” said Cooper.
After the Supreme Court ruling on RFS exemptions, the ethanol industry said it believed the Biden administration would reduce sharply its approval of the waivers, which ballooned under Trump. Some Midwestern lawmakers have filed legislation to restrict eligibility for the one-year waivers to small refineries that already hold a waiver. The legislation would override the Supreme Court.
The appellate ruling in American Fuel and Petrochemical Manufacturers vs EPA is available here.